Over-reliance on customer feedback is hurting local retailers.

For the past few years I have been trying to unravel the mystery of why so many local retailers are reluctant to embrace new marketing technologies such as email marketing and e-commerce web sites. The explanations I get from various small business consultants and web gurus usually fall along the line of “they are resistant to change,” “they are stuck in the past,” “they’re just old-fashioned.”

Barely hidden behind these comments is a raw contempt that suggests that local retailers deserve to fail because they are so “slow to change”

None of these comments have made sense to me. The independent retailers that I know are smart businessmen and women. They are as aware of the challenges as anyone and eagerly looking for solutions. They are not resistant to change. More often it’s a case of not being sure about which change to embrace and which ones will be worth their investment in time and money.

A few weeks ago I came upon another explanation — one that makes sense to me — about the local retailer’s reluctance to embrace new marketing techniques and technology. Last April the Journal of Retailing published a paper, When Do Relationships Pay Off for Small Retailers? Exploring Targets and Contexts to Understand the Value of Relationship Marketing. The authors are Mavis T. Adjei, David A. Griffith, and Stephanie M. Noble.

Their study of 172 local retailers showed that there was a significant difference in the value of customer relationships depending of the audience (customers and suppliers) and local market conditions (highly competitive and dynamic, high levels of customer change). Retailers in their study had an average of eight employees, $634,000 in annual sales revenue, two locations and 18 years in operation.

As you might expect, in most cases the better the retailer’s relationship with customers, the better the store’s performance. In one situation, however, a strong customer relationship actually had a negative effect on performance.

I know that sounds illogical and counter-intuitive, but the study suggests that retailers can become over-reliant on customer feedback. Having that personal, face-to-face contact gives them a false sense of security that they are “in touch” with the marketplace. With that confidence in their customer relationships, they tend to discount what is taking place outside the store.

As the authors of the study explain it –

Market dynamism resulted in a negative relationship between relationship quality
with customers and market responsiveness. This negative moderation suggests a small retailer’s over-reliance on relationship quality creates an inertia effect, thus when practices are changing relying on quality relationships with customers hinders a retailer’s market responsiveness because they fail to adapt to changing marketing practices in the industry.

Independent retailers have been exhorted to embrace new marketing practices and technologies for years with mixed success. As the study shows, the reluctance to do so is not because retailers are stuck or resistant to change. It is primarily because they believe they are already doing what logic tells them they must do: create excellent customer relationships.

Clearly, that is not enough. Now we see that the next step is to maintain those relationships and to monitor and respond to today’s dynamic retail marketplace.

Retail Equalizer offers independent retailers powerful marketing resource.

At least once a month I read a press release or see a local advertisement asking shoppers to shop local. The basic message is that consumers have a responsibility, if not a duty, to do business with local independent retailers. Within the framework of that basic message are reasons why shopping with local stores makes sense. The owners and employees live in the community, their revenues and profits circulate locally and thereby support other businesses and civic enterprises, and those big bad chain stores are. . .well, big bad chain stores. How could you love or shop with such a soulless entity?

As a marketer, I think the “shop local” campaigns have merit. Why not support your local retailer? Unfortunately, there often are good reasons why consumers don’t shop local — higher prices, poor or inconsistent service quality. inconvenient hours, limited product choices, boring or nonexistent sales promotions.

Slow to adopt the Internet and social media to connect — and stay connected — to customers and prospects, too many retailers rely solely on personal, in-store customer contacts. Those contacts are certainly important, but in today’s digital world, face-to-face personal relationships alone can lead to a false sense of security.

Fortunately for independent retailers, companies like the Retail Equalizer help create a level playing field with the large retail chains by offering custom-designed, permission-based email marketing solutions developed specifically for that market. There are three main objectives to the Retail Equalizer program: increase traffic to the store, build customer loyalty, and increase your revenues per customer.

They custom-design and deliver email promotions to the retailer’s permission-based list of customers and prospects. Working with the retailer’s promotion ideas and specifications, they then design the email campaign. They also manage the client’s email list, send out the emails, monitor and report back the results.

If you are too busy or lack the skills to design your own email marketing campaigns, a company like Retail Equalizer might make sense. For $175 a month, they will create a custom-designed campaign including design and copy and deliver your email to 2,500 customers. Compare that to the cost of using a local ad agency or Internet promotions company and that sounds like a pretty good deal.

You can learn more about them here.

Social media and email marketing compliment each other.

Back in October after reading a Wall Street Journal story about the demise of email, I asked the following:

Is the growing popularity of social networking sites like Facebook and Twitter slowly killing off email as an effective marketing tool?

“Death of email” articles like the one from the Journal assume that two methods of communication cannot coexist, each having a unique role to play. For decades now, television and radio have managed to survive — and even compliment each other — even though many media experts believed that TV would kill off the radio box. Likewise, the Internet was supposed to kill off everything — but it hasn’t (though I know some magazine and newspaper publishers who believe the Net gave them two shots in the hat).

Email and social media both have a specific utility. One does certain things better than the other — and that utility can and will change over time. Right now email works best for longer messages, communicating with more personalized, targeted audiences, and adding embedded content. Social networking offers greater immediacy, ease of use, a sense of personal empowerment, and potentially higher levels of frequency.

Email and social networking sites are used in different ways and communicate different kinds of information. One easily compliments the other. Like many of you, I tweet, participate on social networking sites, and send out and receive tons of email.  (I also blog, manage several web sites, and participate in various forums, but that’s another story!)  I don’t see the two as competing for my attention. I use them in the way that I need to and choose my tool according to the task I have in mind.

We’re also finding out that heavy social media users are also above-average users of email play. A Nielsen report back in September showed that social media use did not decrease email usage but actually increased it.

Says Nielsen’s Jon Gibs –

It’s perfectly logical that as people make connections though social media, they maintain those connections outside of the specific platform and may extend those connections to email, a phone conversation or even in-person meetings.

For marketers who worry that social media are making their email programs obsolete, nothing can be further from the truth. The strategy, as always, is to use media that mirror your target audience’s media behavior. In many cases, that means developing your presence in social networks and having a robust email marketing program.

Social networks and gender segmentation.

Thanks to Joe Trippi’s blog, I found some interesting data about the gender composition of social networking sites.

The research data and chart come from Royal Pingdom, which used site demographics data for the United States gathered from Google’s Ad Planner service.

The study shows that many sites are heavily tilted towards one gender demographic or the other. A few, like LinkedIn and Delicious, are more gender neutral.

For marketers trying to match up their target audience’s gender profile with different social networking sites, the study provides a good starting place for segmentation analysis.

Some of the specific findings from Royal Pingdom –

* 84% (16 out of 19) of the sites have more female than male users.
* The social news sites Digg, Reddit and Slashdot have significantly more male users than female. The standout here is Slashdot which takes male geekdom to new heights with 82% male users.
* If we hadn’t included the three social news sites, all of the sites would have had more females than males.
* Twitter and Facebook have almost the same male-female ratio; Twitter with 59% female users and Facebook with 57%.
* The most female-dominated site? Bebo (66% female users), closely followed by MySpace and Classmates.com (64%).
* The average ratio of all 19 sites was 47% male, 53% female.

Social media experts sing if I had a hammer.

You LOVE hammers!

You SELL hammers!

You know in your gut that hammers are cool, hip, and can change the world if given something to bang.

Everywhere you go you sell hammers. You want to sell me a hammer. You believe fervently, passionately that my situation would be vastly improved if I had a hammer. So you knuckle down, polish your pitch, and try over and over again to sell me a hammer.

The problem is that I have this screw that I am trying to attach to a piece of wood. What I really need — I figured this out on my own — is a screw driver, not a hammer. That is my situation: a man with a piece of wood, a screw, and no screw driver.

There’s an opportunity there for someone to sell me a screw driver because that’s what I need. But you don’t sell screw drivers, you sell hammers. So instead of offering me a screw driver, you persist in selling me a hammer because you are in love with hammers. That’s all you know — hammers.

“Well, you can always bang in the screw!” you shout at me, frustrated by my obvious ignorance about the virtues of hammers.

Since you refuse to acknowledge my obvious disinterest in hammers, I grab you by your shirt collar and throw you out the door.

Although I am baffled by my situation — the screw, the piece of wood, attaching the screw to the wood, etc. — I still know the difference between a nail and a screw, a hammer and a screw driver.

I am in need but I am not an idiot.

Abraham Maslow famously once said: “If you only have a hammer, you tend to see every problem as a nail.”

The concept is thus: individuals who are incomplete in their knowledge or training of solutions propose the same type of solution to every problem they encounter.   They opt for the more familiar solution to one that may be more effective yet with which they are unskilled.

The question you face is whether the solutions you offer prospects are limited either by your training or a predisposition to see problems in a certain way.  Looked at closely enough, there are ethical as well as practical issues here.  Not only might you be harming clients who might be better served with other solutions, you might find prospects more resistant than you expect to your marketing efforts.

Like the fellow with the screw and the piece of wood, they know the difference between a hammer and a screw driver.